Unemployment vouchers versus low-wage subsidies

Arbeitspapier

The paper examines the relative effectiveness of two policy proposals in reducing unemployment and working poverty: unemployment vouchers and low-wage subsidies. The unemployment vouchers are targeted exclusively at the unemployed (especially the longterm unemployed) and are provided only for a limited period of time. The low-wage subsidies, on the other hand, are granted to all low-wage earners regardless of their employment history and are of limitless duration. Our analysis indicates that the relative effectiveness of the two policies depends on workers? prospective wage growth. The more upwardly mobile workers are (i.e. the more their wages rise with employment duration), the more effective will unemployment vouchers be relative to low-wage subsidies. Conversely, the greater the danger that workers come to be trapped in dead-end jobs with flat wage profiles, the more effective will low-wage subsidies be relative to unemployment vouchers.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 537

Classification and Topics

• Classification: Wirtschaft ; Mobility, Unemployment, and Vacancies: Public Policy ; Wages, Compensation, and Labor Costs: Public Policy ; Labor Demand ; Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions ; Unemployment: Models, Duration, Incidence, and Job Search ; Unemployment Insurance; Severance Pay; Plant Closings
• Subject: unemployment ; poverty ; wages ; employment ; vouchers ; subsidies ; inequality ; Arbeitsmarktpolitik ; Voucher ; Arbeitslosenversicherung ; Lohnsubvention ; Wirtschaftspolitische Wirkungsanalyse ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Orszag, Jonathan Michael ; Snower, Dennis J.
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/2851
• Last update: 10.03.2025, 11:45 AM CET